What Do Tainted Milk and Ad Fraud Have in Common?

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By Kirk McDonald, President, PubMatic

What do the food and digital advertising supply chains have in common? To most, it may seem like nothing; but, perhaps surprisingly, there are numerous direct parallels that can be drawn between them primarily around complexity and potential quality issues. These parallels are increasingly useful in understanding how both industries can conquer their biggest challenges.

The food supply chain is a sensitive structure where the balance of supply and demand can be detrimentally rocked by issues with food quality or safety, as noted by a recent study by Technomic and Deloitte that discusses how changes in food demand, such as delivery and organics, are challenging industry leaders to simultaneously address supply, as well as product integrity and quality.

In digital advertising, many of these challenges are the same, but instead revolve around ad inventory quality. Recently, PubMatic partnered with other digital industry leaders and the Interactive Advertising Bureau (IAB) to sponsor the study, “What is an Untrustworthy Supply Chain Costing the US Digital Advertising Industry?” The study’s findings confirmed what those of us in the industry already know: Ad Fraud is a serious concern that, left unchecked, will continue to grow.

A snapshot from the research reveals: The three predominant types of fraud (invalid traffic, infringed content and malvertising) result in an estimated $4.8 billion loss in incurred costs for advertisers, and more than $3.4 billion in lost revenue opportunity. That’s an estimated $8.2 billion cost total. And that’s just the beginning. Infringed content, which accounts for $2.4 billion of the lost revenue number, is expected to increase markedly in the next year, unless the industry collectively takes significant steps.

The way the food supply chain challenges are being solved is a model of best practice that the digital advertising industry is already using to address its own supply chain challenges. It’s a coordinated, three-prong approach that combines people, process and technology.

People

In the food supply chain, meeting demand in today’s evolving consumer world requires industry leaders take a large-scale coordinated approach to operational efficiency. Without the right communication and collaboration at the macro and micro levels, there’s no way to meet rising demands without suffering huge cost impacts.

Likewise, in the digital ad supply chain and fight against ad fraud, the real effort starts with the people leading digital advertising on the front lines. Put simply, it means empowering operational managers to form cross-functional, cross-organizational teams that include sales, operations, campaign management and others, and to review inventory and weed out fraudulent sites.

At a larger, industry-wide level, it means premium publishers partnering and building relationships with each other to establish trust and develop a cohesive action against ad fraud. It means knowledge sharing and banding together to understand the space and the ways fraud can infiltrate systems.

Most critically, it means committing to transparency – both in steps taken to combat this growing challenge and the issues faced by industry leaders in doing so.

Process

Having the right process to identify ad fraud ensures that proactivity isn’t lip service. Process is not only critical to identifying fraud, but also to reviewing deals and vetting publishers being considered for partnership.

Leading publishers and inventory suppliers should develop a rigorous and systematic approach to ensure a high level of inventory quality. This involves evaluating all ad inventory supply, flagging site domains or supply partners that look suspicious and removing fraud by adding sites to block lists. Also, because fraudulent advertising doesn’t sleep, processes need to be automated and run on a constant basis – which is critical at off-peak times when fraud might strike, such as overnight. On the flip side, while automated tools are necessary, they are rules-based and sometimes might not always understand the ambiguities in inventory supply – e.g. global traffic coming from unknown geographies. Therefore, cross-functional fraud teams (made up of both technical and operations experts) should regularly evaluate inventory through manual site audits. Finally, because fraudulent sites often evolve in order to circumvent filters and flagging, processes need to be vigilant in identifying and perpetually subduing even the cleverest of fraudsters at the point of inception.

Just like the evolving food chain described in the Technomic/Deloitte study, the digital advertising supply chain cannot successfully fight nefarious external influences without a coordinated approach and real-time visibility into how things are moving to customers. In the food supply chain, this real-time visibility is coming about as a result of processes that leverage new and improved technologies to track, monitor and preserve food safety for the world. In digital advertising, it’s all about building smart, agile processes that let the people and technology do their jobs and preserve ad safety for the advertising world.

Technology

In an industry that was built and grown on technological advances, it’s no surprise that technology is perhaps the most critical ingredient in the ad fraud fight equation.

As the global food supply chain grows and becomes more complex, organizations are right-sizing their networks to improve forecasting and inventory. They’re doing this with advanced modeling and scenario alternatives, and analytics platforms that provide real-time data and insight.

In the digital advertising supply chain, data and analytics tools are enabling industry players to continually grow their understanding of systems and inventory, providing a way to better identify – and eradicate – fraud at the source. Developments in technology include home-grown solutions, as well as strategic industry partnerships, resulting in a focus on outcomes and collaboration rather than company divides. The digital media and advertising industry has always developed effective self-regulation and self-enforcement policies when confronting major industry challenges – especially around standardization, measurement and privacy. Efforts on the part of the IAB and its members to develop research, education and contribute to eradicating ad fraud are steps in the right direction towards an industry that stands for high quality rather than high volume.

However, while industry leaders and industry associations can pave a path towards high quality, it’s up to all industry stakeholders and individual at those companies to strive towards a greater industry goal. Executed correctly, this approach of people, process and technology can produce a seamless and coordinated way of identifying, purging and preventing inventory fraud to ensure a brighter future for the digital advertising industry.

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